Google to likely make modest profit on Nexus 7, IHS teardown reveals

16GB version charges premium price for double the storage

A teardown of the Nexus 7 tablet reveals Google is likely to break even on the $199, 8 GB version of its tablet while earning a modest profit on the 16 GB version, priced at $249.

IHS iSuppli said the 8 GB version of the Nexus 7 has a bill of materials (BOM) and manufacturing total cost of $159.25. The 16 GB version total is $166.75.

Google launched its Nexus 7 tablet at its Google I/O conference in San Francisco. (Image: Google)

"Google will at least break even on the 8 GB model ... and will make a modest profit on the 16 GB version," IHS said in a statement last week.

With the 16 GB version, Google is charging $50 more at retail by adding only $7.50 more in memory cost, adding $42.50 to Google's bottom line, IHS said.

IHS said its teardown totals are preliminary and don't include software, licenses and royalties.

IHS analyst Andrew Rassweiler said the Nexus 7 competes more with Amazon's Kindle Fire, also a 7-in. tablet that sells for $199, than the $499, 9.7-in. iPad.

Both the Fire and the Nexus 7 have the same size display and save costs by providing Wi-Fi only, and not including 4G or 3G service, Rassweiler said. Other than having nearly the same amount of battery life and the same price, Rassweiler said the Nexus 7 has superior specifications that "may make it more desirable to consumers."

Among those specs is the Nexus 7's higher resolution display with in-plane switching technology and a quad-core Tegra 3 processor from Nvidia, compared with the Fire's OMAP 4430 dual-core processor from Texas Instruments. Also, Nexus 7 comes with a camera and NFC (near field communications) chip, both missing from the Fire.

Such added features make the 8 GB Nexus 7's materials cost $18 higher than the Kindle Fire's materials cost of $133.80, which has fallen dramatically due to reductions in component prices. At the time the Fire first launched last year, IHS said its BOM was $191.65, meaning that Amazon was paying a subsidy on the device when other costs were added in, Rassweiler noted.

IHS also found a tablet novelty in the Nexus 7 components -- a combination of a gyroscope and an accelerometer from InvenSense. The Samsung Galaxy S IIIsmartphone also has a combination device built by STMicroelectronics, IHS said.

Displays are typically the biggest BOM cost of any tablet or smartphone and the same holds true for the Nexus 7, IHS said. The display costs $38, plus another $24 for the touchscreen. The Kindle Fire's display costs $35, and its touchscreen costs $24.

The biggest difference in a component cost between the Nexus 7 and Kindle Fire is the processor. The Nexus 7's Tegra 3 chip costs $21 versus $13.50 for the Kindle Fire's OMAP 4430.

In an email, Rassweiler said the Tegra 3 "should be a very powerful chip and therefore has the potential to provide the foundation for a very good user experience."

Even though IHS compared the Nexus 7 with the Kindle Fire, Amazon is expected to soon update the Fire, with four tablet versions expected.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His email address is mhamblen@computerworld.com.

See more by Matt Hamblen on Computerworld.com.

Read more about mobile and wireless in Computerworld's Mobile and Wireless Topic Center.

Join the newsletter!

Or
Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Matt Hamblen

Computerworld (US)
Show Comments

Essentials

James Cook University - Master of Data Science Online Course

Learn more >

Mobile

Victorinox Werks Professional Executive 17 Laptop Case

Learn more >

Exec

Budget

Back To Business Guide

Click for more ›

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?